The Bangko Sentral ng Pilipinas expects lower utility charges and the strengthening of the local currency against the US dollar to counter the impact of higher oil and rice prices to the rate of price increases for July.

BSP Governor Amando Tetangco Jr. said that they project July 2011 inflation rate to stay between 4.3 to 5.2 percent.

The lower end of the forecast is the average inflation rate in the first six months this year. Inflation last June rose to 4.6 percent from month-ago’s 4.5 percent based on the 2000-series of the National Statistics Office.

“Although still elevated, inflation pressures seem to have moderated,” Tetangco stressed.

He cited that “there still remain risks particularly with respect to volatilities in international commodity prices and the impact of foreign exchange inflows on domestic liquidity.”

Thus, Tetangco said monetary officials “will continue to monitor developments, including changes in global demand and shifts in investor sentiment toward emerging markets.”

“We will take all these into consideration during our policy meeting this week to ensure that our policy settings remain appropriate,” he added.

Central bank’s policy-making Monetary Board will have its policy meeting on Thursday.

The board has hiked by a total of 50 basis points, specifically by 25 basis points each last March and May, BSP’s policy rates.

Last June, it also increased by one percentage point banks’ reserve requirements to 20 percent from 19 percent previously to offset the continued rise in domestic liquidity, which put additional inflationary pressure.*PNA

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